AMP Capital to set up JV with China Life
02 September 2013
News, Asia, Australia, China
By David Macfarlane
AMP Capital is to establish a funds management company in China with China Life Asset Management Company, a subsidiary of China Life Insurance (Group) Company, China’s largest insurance group, institutional investor and corporate pension manager.
AMP Capital will be a founding shareholder holding a 15% stake in China Life AMP Asset Management Company Limited with the balance to be held by China Life Asset Management Company. The joint venture has received regulatory approval from the China Insurance Regulatory Commission (CIRC), and is subject to regulatory approval by the China Securities Regulatory Commission (CSRC).
Chief Executive International and Head of Global Clients Anthony Fasso says: “We expect to receive approval for the joint venture in about six month’s time; so it should be up and running in 1H 2014.”
Mr. Fasso also tells Asia Asset Management that as well as its 15% stake in the JV, the firm will have one person on the board. That person will be Judy Ye, who is currently chief representative of AMP Limited Beijing (Representative Office). Ms. Ye joined the AMP Limited Beijing Representative Office in 1999 as AMP’s chief representative in China; her role includes promoting the AMP Capital brand with prospective business partners.
When asked about the size of AMP Capital’s stake in the JV, Mr. Fasso explains: “There are JVs you can enter with a higher percentage but most often these are with a smaller financial sponsor. Given the sheer size of this, it’s important to note that China Life is the single largest domestic institutional investor in China. We do expect this JV to be a very, very large one; particularly as it's being sponsored by an insurance company.”
China Life AMP Asset Management Company Limited will offer retail and institutional investors in China access to leading investment solutions initially in domestic listed equities and fixed income. China Life AMP Asset Management Company Limited will be China Life’s first joint venture in mainland China with a foreign partner in fund management.
AMP Capital and China Life Asset Management Company are the first to take advantage of new regulations which came into effect June 21, 2013, allowing insurance companies in China to establish funds management companies offering public mutual funds to retail and institutional investors.
The sweeping new reforms are expected to provide investors easier access through new distribution channels and drive more innovative investment solutions to meet the evolving needs of Chinese customers in this rapidly growing savings market.
The rapid growth of wealth management in China presents significant opportunities for funds management companies. Total assets under management in China’s mutual fund industry is expected to reach A$800 billion (US$715.33) in 2013 growing at 15% per annum to reach almost A$1.5 trillion in 2017.
AMP Chief Executive Officer Craig Dunn said China is an important part of AMP’s growth strategy, which is focused on expanding internationally through its funds management business AMP Capital.
“A funds management joint venture in China is a strategically significant move for AMP, giving us direct access to the world’s second largest and fastest growing major economy,” Mr. Dunn said.
“Both China Life and AMP share a common heritage of being among the most well-known and respected financial services brands in our home markets.
“The funds management joint venture represents the commercialisation of our Memorandum of Understanding (MOU) with China Life and is the ideal balance of our mutual strengths and capabilities,” Mr. Dunn said.
AMP Capital has developed a reputation for delivering high quality investment solutions for global pension funds, institutional investors and retail investors with expertise in key asset classes such as real estate, infrastructure, equities and fixed income.
AMP Capital Chief Executive Officer Stephen Dunne said: “China Life Asset Management Company brings a strong brand and leading market position, significant distribution capability and a deep understanding of customer needs in a dynamic market to the joint venture. While AMP Capital has extensive expertise in product development, risk management, governance expertise and investment and research which will be shared with the joint venture.
“Having an on-the-ground presence is vital to building a sustainable position as an onshore player and together China Life Asset Management Company and AMP Capital have the combined capability to succeed. We’re really excited about being part of the rapid growth of funds management in China,” Mr Dunne concluded.
With this joint venture AMP Capital now has significant institutional and retail reach in three of the world’s largest savings and pension markets – Australia, China and Japan.
AMP has had a presence in China since 1997 and AMP and China Life have had a formal relationship for nearly eight years.
The relationship became a closer, deeper relationship in 2006 when the two companies cooperated in Qualified Foreign Institutional Investor (QFII) investments and subsequently when China Life and AMP entered into the MOU for strategic cooperation in late 2009, which encompassed areas for partnership in funds management and pensions.
Since the signing of the MOU, both AMP Capital and China Life have been actively exploring mutual cooperation in a number of areas while exchanging investment expertise and experience.
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